A Waterway, A Ship, and A Really Inconvenient Traffic Jam
What happened?
The container ship, Ever Given, got stuck in the Suez Canal on March 23rd 2021. If you haven’t heard of it on the news yet, you must have seen the memes. As of March 28th, the Suez Canal Authority stated that there was still an investigation to determine how the ship got stuck was still underway. Shoei Kisen Kaisha Co., stated in a press release on March 25, 2021: “Our container carrier MV EVER GIVEN encountered stormy weather while traveling north on the Suez Canal from China to Europe,” and continued by mentioning that the container had gone “aground.” As the work to re-float the ship continued, the Suez Canal could not be crossed.
Just go around!
The Suez Canal sees many vessels travel through its relatively narrow waterway. In 2019, 18,880 vessels traveled through the canal — that’s 1031.2M cargo tons (Suez Canal Authority, 2019). The reason the Suez Canal is so often used is that it connects the Mediterranean Sea and the Red Sea across the Isthmus of Suez in Egypt. When the Ever Given got stuck, the only remaining path connecting the Mediterranean and Red Sea was around the continent of Africa.
Is it possible? Yes. Feasible? No — but when authorities weren’t even sure how long it was going to take to unblock the canal, the long way seemed much shorter than the wait. In a quote for The Washington Post, Lars Jensen, the CEO of SeaIntelligence Consulting, said “We’re now beginning to see even vessels that had entered the Mediterranean hang a U-turn.” As the time it takes for the Ever Given to get back on track increased, more ships used the alternative route, as to not halt the global economy.
Taking the detour, however, had its consequences. According to BBC news, going around the Cape of Good Hope in South Africa can take two weeks longer. The longer trip resulted in more oil usage to fuel the ships. The New York Times writers, Peter S. Goodman and Stanley Reed, report that “the additional fuel charges for the journey generally run more than $30,000 per day, depending on the vessel, or more than $800,000 total for the longer trip.” Because the canal was unblocked on March 29th — six days later — the longer trip ended up not being worth it.
What now?
The Ever Given was not just the cause of an ordinary traffic jam. It was the cause of an extremely expensive traffic jam. There were already fears of rising prices all over the world. According to David J. Lynch for The Washington Post, prices of oil and East African coffee beans, among others, were already rising on Friday, three days after the blockage started. According to an article from The Guardian, about 12% of global trade passes through the Suez Canal. These include manufactured goods such as clothes, raw materials, and oil, all of which were stopped at the Suez. Major effects of the blockage were seen in Europe and Asia, but Lynch believed the effects would have been seen in the United States as well if the Ever Given remained stuck.
Though the effects of the 2021 Suez Canal Blockage were small price increases for the world, they could be millions of dollars for Shoei Kisen Kaisha Co., the owners of the Ever Given. A report by Carolyn Cohn and Jonathan Saul on Reuters explains that the owners and insurers of Ever Given could see “claims totalling millions of dollars even if the ship is refloated quickly.” Cohn and Saul explain that the basis of these claims can range from loss of revenue from other companies to the costs of the “salvage operation.”
As the global economy held its breath, the Suez Canal Blockage showed us how interdependent world trade has become. Whether it is a good or bad thing, depends on the context of the situation. It brings up conflicting opinions about our international dependence for goods, and taught lessons about supply chain risks. The one good thing that may have resulted from the blockage — the memes.
